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Fixed Deposit Interest Rate: Best FD Rates By Top Banks in 2020?

IndianMoney.com Research Team | Posted On Monday, January 13,2020, 05:33 PM

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Fixed Deposit Interest Rate: Best FD Rates By Top Banks in 2020?

 

 

With the start of a new year, most depositors and senior citizens are looking forward to changes in the FD interest rates. Many banks are offering FD investments at competitive interest rates and thus investors can now place their surplus funds in their most preferred investment option. Now you can not only save money for your rainy days but also get a better interest rate on your savings.

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Let’s take a look into the benefits of investing in FDs:

What is a Fixed Deposit?

A fixed deposit is a risk-free investment instrument offered by the banks and NBFCs for a fixed tenure at a pre-specified rate of interest. In this scheme, the depositor can contribute a fixed sum of money into the FD account. To start an FD you have to open an FD account and deposit a one-time corpus at the time of opening the account. At the end of the investment tenure, you will receive a good interest income on your investment. The interest on your savings will be calculated on the principal amount and the total sum including the interest income will be paid back at maturity.

See Also: Benefits of Fixed Deposit in India

A fixed deposit earns a higher interest income than a regular savings account. On maturity, you can either reinvest the money for a second term or use it to fund your big-ticket purchases. FDs are also known as term deposits and its investment tenure varies from 7 days to 10 years. The rate of interest varies across banks and NBFCs and is mainly dependent on the investment tenure and the interest rate levied by the bank.

Here are some of the key benefits of opening an FD account:

  • It can be opened by all residents of India, including minors and HUFs.
  • You can choose a nominee who is eligible to receive the maturity proceeds upon the death of the primary account holder.
  • You cannot withdraw the deposits before its maturity. As such your money is locked in for a fixed period and thus encourages investors to save money for their rainy days.
  • Premature withdrawal of fixed deposits attracts penalty which is 1-2% of the interest income. This facility allows investors to liquidate their savings and avail cash in grave financial emergencies.
  • You can avail loan on your fixed deposit to meet financial emergencies. In this facility, you become eligible to get a loan by pledging your FD certificate as collateral. Depending upon the bank, you would get a loan on your FD up to the extent of 75-95% of the FD amount, which varies from one lender to another. Rate of interest on FD loans is 1%-1.5% higher than your FD rate.

See Also: Is It Good to Invest in Corporate Fixed Deposits?

Banks offering a high-interest rate on fixed deposit in 2020:

Name of the bank

Interest rate for normal citizens

Interest rate for senior citizens

SBI Bank

4.50%-6.10%

5.0%-6.60%

HDFC Bank

3.50%-6.40%

4.0%-6.9%

ICICI Bank

4.0%-6.40%

4.50%-6.90%

Axis Bank

3.50%-6.65%

3.50%-7.30%

Kotak Bank

3.50%-6.30%

4.0%-6.80%

Bank of baroda

4.50%-6.25%

5.0%-6.75%

CitiBank

3.0%-5.25%

3.50%-6.0%

IDBI Bank

3.50%-6.45%

4.0%-6.95%

Indian Bank

4.50%-6.40%

5.0%-6.90%

Indian Overseas Bank

4.50%-6.35%

5.25%-7.10%

Here you must remember that the FD rates vary based on your investment tenure. You are likely to get best the interest rate on 5-year FDs. Banks also provide better rates to senior citizens to help them get better returns on their investments.

NBFCs offering high interest rate on fixed deposit accounts in 2020:

 Fixed deposits are investment tools offered NBFCs as well that allow investors to invest a lump sum amount in return of a fixed interest rate over the investment tenure. It offers you a better interest rate than a bank savings account and is a risk-free investment option. Thus as an investor, you must know about the best NBFCs that offers you the best interest rate on your FDs.

Here is a list of the best FD interest rate for 2020:

Name of the NBFC

Interest rate for normal citizens

Interest rate for senior citizens

Shriram City

Up to 9%

9.25%

Mahindra Finance

Up to 8.45%

8.70%

Sundaram Finance

Up to 7.5%

8%

Laxmi Vilas Bank

Up to 7.5%

8.10%

ICICI Home finance

Up to 7.85%

8.10%

LIC Housing Finance LTD.

Up to 7.35%

7.55%

KTDC

Up to 8.65%

8.90%

Highlights:

FD interest rates are mainly based on the changes in RBI monetary policy like changes in repo rate, internal liquidity, and position of banks, economic conditions and the level of credit demand. The rates vary from one institution to the other based on the deposit amount, tenure of investment and type of depositor.

See Also: Investment Bonds Vs Fixed Deposits: Which Investment is Good?

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